Institutions step up war impact checks

The International Monetary Fund, World Bank and International Energy Agency are moving towards scheduled calls every two weeks as they deepen coordination over the economic and energy fallout from the war in the Middle East, with officials warning that prolonged disruption could sharpen inflation, weaken growth and hit poorer energy-importing countries hardest. The three bodies first set up a joint coordination group at the start of April and have since widened their joint warnings as the shock to oil, gas and shipping flows has intensified.

The plan reflects mounting concern in Washington, where the spring meetings of the IMF and World Bank have been dominated by the conflict’s effect on commodity markets and financial conditions. The IEA, IMF and World Bank said coordinated action had become essential because the war had already produced one of the largest energy supply disruptions on record. By Monday, IEA chief Fatih Birol said some countries were holding back stocks or imposing export restrictions, steps that the institutions believe would worsen an already strained market.

Pressure has centred on the Strait of Hormuz, a vital artery for oil and liquefied natural gas. Reuters reported that the conflict, which began on February 28, has sent oil prices up about 50% and disrupted flows across the region. By April 13, oil had climbed back above $100 a barrel, while Birol said more than 80 oil and gas facilities across the Middle East had been damaged. He also said the IEA had already coordinated the release of 400 million barrels from emergency reserves, the largest such move on record, and stood ready to act again if needed.

That has widened the discussion far beyond fuel markets. IMF Managing Director Kristalina Georgieva has argued that the conflict is not just an energy shock but a broader macroeconomic threat, especially for countries that rely heavily on imported fuel and have little fiscal room to cushion households. The Fund has said the war would push growth lower and inflation higher, and on April 14 it warned that the world economy was already drifting towards a more adverse scenario. Reuters reported that the IMF said it would have upgraded its global growth view to 3.4% for 2026 had the conflict not intervened.

The World Bank is preparing for a heavier financing burden as well. Bank President Ajay Banga said the institution could mobilise between $80 billion and $100 billion over the next 15 months for countries hit hard by the war, exceeding the scale of its pandemic response. That would include an immediate $20 billion to $25 billion through crisis-response tools and another $30 billion to $40 billion from repurposed existing programmes, with further balance-sheet support possible if the conflict drags on.

Officials say the damage is likely to be highly uneven. Low-income and commodity-importing economies in Asia, Sub-Saharan Africa and small island states have been singled out as especially exposed to higher fuel bills and tighter supplies. The joint message from the three institutions has therefore combined calls for open trade flows with a warning against panic policymaking. Georgieva has urged governments not to impose export restrictions, while Birol has said no country is immune from the scale of the disruption.

The IEA’s latest market assessment underlined why the institutions want a tighter and more regular information loop. Reuters reported on April 14 that the agency had cut its 2026 oil-demand outlook sharply, moving from expected growth of 640,000 barrels per day to a decline of 80,000 barrels per day, while estimating that supply had fallen by 1.5 million barrels per day, or about 1.5% of global demand. Although the IEA still sees a small annual surplus if flows normalise by mid-2026, it said the situation remains highly uncertain.

Financial risks are also rising. In its Global Financial Stability Report, the IMF said the war had already helped drive an 8% fall in global equity prices since February and pushed up sovereign bond yields as investors priced in stronger inflation pressures. The Fund warned that a longer conflict could tighten funding markets more abruptly, hitting banks, leveraged investors and private credit funds. Tobias Adrian, who heads the IMF’s monetary and capital markets department, said the conflict was the shock now testing vulnerabilities that had been building in the system.